Sunnylands, not the White House. That's the private estate in the California desert where the U.S. and China will hold a summit tomorrow. The meeting between President Obama and China's new president, Xi Jinping, comes as China is buying its way ever deeper into the U.S. economy.

The Chinese offer last week to acquire U.S. pork company Smithfield Foods is just the latest and biggest example. As NPR's Tom Gjelten reports, U.S. leaders have long focused on the military challenge from China. Now they're dealing with the commercial challenge.

TOM GJELTEN, BYLINE: China is awash with new money, and Chinese companies are fanning out across the world in a search for ways to spend their cash. Last year, Chinese companies sunk nearly $7 billion into U.S. firms, and Eswar Prasad of The Brookings Institution says expect that figure to grow and grow and grow.

ESWAR PRASAD: The reality is that there is going to be a wave of money coming from China. It is becoming a richer country. Its households, its firms, its banks are all looking for investment opportunities abroad, and the U.S. still remains a very good place to invest.

GJELTEN: The more China has invested in the U.S. economy, the bigger stake it has in the U.S. staying prosperous. That's good for America. But China is also America's number one international rival. It's the country the U.S. military worries most about confronting. And Ian Bremmer, president of the Eurasia Group, says Chinese investors present some unique threats from the U.S. perspective.

IAN BREMMER: The Chinese have very little respect for intellectual property. They don't have an independent judiciary. They steal all sorts of trade secrets, and they're engaged in cyberattacks on behalf of state-owned enterprises in China, all of which means we have to be careful about what sectors and what investments we do and don't want the Chinese to be in.

GJELTEN: There is a U.S. government organization that looks at proposed Chinese investments and considers whether they raise national security concerns. It's called the Committee on Foreign Investment in the U.S., or CFIUS, as it's known in Washington. Nova Daly ran the CFIUS review process under the Bush administration.

NOVA DALY: It looks at the threat that emanates from the foreign buyer, the vulnerability created by what is being bought, and that tells you what the risks are.

GJELTEN: The question now is whether this process for reviewing Chinese investments in the United States is adequate to the task, given how fast China is moving into the U.S. economy. In theory, at least, the U.S. commitment to free trade and investment around the world is based on the idea that competition between firms is good.

But in the case of China, we're talking about competition between two economic systems: private capitalism and state capitalism. That makes the competition a bit uneven. Eswar Prasad, who formerly served as the head of the China Division at the International Monetary Fund, notes that many of the Chinese companies that operate abroad are owned by the Chinese state and thus get special privileges.

PRASAD: Many Chinese firms do come in with too much cheaper funding. They have much better access to various sorts of capital and other resources domestically. So they do have a bit of a leg up over American firms in some respects.

GJELTEN: Play that out and you get an idea of what's alarming about the growing Chinese investment here, at least in the view of Ian Bremmer.

BREMMER: We don't suddenly want a Chinese investment into an American corporation to mean that five or 10 years down the line, we've lost all that technology, the Chinese are undercutting us and we're at a competitive disadvantage.

GJELTEN: These are not new issues, but Nova Daly, the former CFIUS director, says if Chinese investment in the U.S. continues to expand at the current pace, China's leaders should expect the investment review process to get even more strict.

DALY: The Chinese need to understand that state-owned enterprises are government enterprises, and when they make investments here, they are going to endure additional scrutiny.

GJELTEN: One option: a new bilateral investment treaty between the United States and China, setting down some new rules. Chinese firms wanting to invest in the United States may need to give up subsidies from the Chinese state and promise to respect intellectual property, for example. That would be an ambitious project. And if that treaty is to get under way, Presidents Obama and Xi will need to talk about it this weekend in California. Tom Gjelten, NPR News, Washington. Transcript provided by NPR, Copyright NPR.